Tough HR decision: Layoffs or pay cuts?
December 4, 2008 by Fred HosierPosted in: In this week's e-newsletter, Latest News & Views, unusual programs
HR pros across the country are coming up with some creative plans to deal with the ongoing recession when upper management wants cuts in payroll.
At WCCO radio in Minneapolis, management has asked its highest paid on-air talent to take a 10% pay cut to limit the number of employees who would be laid off, according to MinnPost.com.
Afternoon host Don Shelby says he accepted the voluntary pay cut. CBS Radio Minneapolis market manager Mary Niemeyer confirmed that the offer was presented to other employees, but she wouldn’t say how many others accepted the voluntary pay reduction.
The station did announce it had to lay off two news reporters, one full-time, one part-time.
Also in Minneapolis-St. Paul metropolitan area, the newspaper, the Pioneer Press, has offered this cost-cutting opportunity to employees: They can take up to six months of unpaid leave in 2009 and return to their same job. The newspaper did something similar in 2001 and 2002.
Mike Bucsko, executive director of the Newspaper Guild, the union representing reporters and some other employees at the paper, said it might be better for some people to consider the offer rather than face other drastic cost-cutting measures.
What do you think of these alternatives to layoffs? Let us know in the Comments Box below.
Tags: layoffs, pay cut, recession, unpaid leave
December 5th, 2008 at 11:59 am
At one time our company implemented a temporary measure to cut payroll expenses by changing to a 4 day workweek with an accompanying 20% cut in pay. The extra day off helped soften the blow of losing the income.
December 5th, 2008 at 12:02 pm
It should be executive management that takes the 10% pay cut, not just the highest paid “on-air” talent. Lead by example folks. If the working class must have its wages cut, so to should Executive Management go first. This includes Boards, Audit Committees, CEO’s, CFO’s, etc. Do away with the multi million/billion dollar bonuses first. Then ask those who are already struggling to take a hit.
December 5th, 2008 at 1:04 pm
I agree with GN ‘Do away with the multi million/billion dollar bonuses first. Then ask those who are already struggling to take a hit.’ After all, isn’t it those high paying positions that are supposed to prevent losses in their respective industries. The challenge here and as witness in Congressional hearings for those asking for the Governments help/handouts; is how to justify the bonus’ that are paid to CEO, CFO, COO and any other O’s positions – yet cut those salaries of the “working class”. Those in the non – O’s position are after all the majority of those affected by the economic struggles of our newly announced ‘recession’…really folks, you just now decided this?!?!?! Along with the downturn in housing/foreclosures, unemployment (6.7% nationally-my state is at 8.2%). If just one of the big O’s, cut their bonus for even just one year – how many jobs or salaries would that prevent from being cut? I know that the O’s work hard (or at least the ones with integrity do) and do I agree that the deserve a larger salary – YES, of course! But truly analyze the results of your bonus’ and the ill effects that result – does one really and truly need another $ 500 k – $ 33 million dollars to survive (survive=feed your family, keep a roof over their heads, some warm clothes in winter, good shoes, school supplies, daycare, fuel, etc.)…I am guessing that some of the O’s could also scale down a bit too, maybe instead of 3 vacations per year to tropical remote desitinations with all the frills – could they possibly take only 2 per year. I don’t know, it’s just this hard working, middle-class, parent’s opinion. I admire those that are willing to take less, so those that already have less; don’t have to have even less and still can SURVIVE !!!!!!
December 5th, 2008 at 3:02 pm
In response to NR: To a degree I can hear what you are saying. Salaries and bonuses, in theory, are designed to incentivize the receipients to perform at their best. Unfortunately, Boards of Directors awarding salaries out of range of reality and unconditioned bonuses or those awarded in support of failure are the cause of what you have described. Basically, someone valued these O’s to that level. While cutting salary and bonuses of these O’s will provide some additional cash, it will not solve the problems. The biggest problem is that upper level management is insulated from reality that they can’t or won’t see the big picture. As an example, in the auto industry, for 30+years the country has asked for fuel efficient cars by buying foreign. American automakers made no effort to meet this demand until gas hit $4 per gallon. Now their companies are ready to fold and they expect the nation to shed crocodile tears for them. Further, even in the face of failure. the executives continue to be rewarded financially. Why should they change the way they operate? It’s a systemic change that is needed, a review of the value to an organization’s success.
December 5th, 2008 at 4:59 pm
I am in a company that is experiencing some extremely hard times. I too have taken a pay cut. Voluntarily. HOWEVER, the reason I decided to go along with it is because those who I reported to at the time took a pay cut FIRST. Of course, shortly after that, all of my expenses went up through no fault of mine (gas, other utilities, groceries, etc.), so I am struggling along with so many others. Our nation as a whole has become…well, there’s no other way to put it…GREEDY. I agree with NR regarding survival. Unfortunately, for many who are privileged to “earn” hundreds of thousands (or millions) of dollars, the difference between ‘need’ and ‘want’ is quite fuzzy. Whereas some are making a decision to take fewer vacations, others are having to decide between paying a bill and feeding their children or going to the doctor. We are fast forgetting that little quality called “humility.” What a sad commentary about our nation. I know first hand having travelled to Europe that many Europeans view Americans as greedy and selfish, though most with that opinion have had little or no no first-hand experience dealing with Americans. The international headlines the state of our nation is garnering is making them think they are right!
March 26th, 2009 at 8:59 am
Hi,
I am facing having to tell my staff about a pay cut. What free benefits would you suggest in return? working less hours is not an option. I am thinking along the lines of flexible hours, casual dress policy etc.